e-Nagar

November 13, 2006

Basic Salary

Filed under: salary, Thoughts — pegasus @ 8:39 AM

Continuing with my previous discussion:
I have a 6 digit CTC, a smaller gross salary, a 5 digit take home and a 4 digit basic salary.
To add to my confusion, I have small earnings via interest and stock-trading. Now these 2 components are essential when I want to compute my Net Worth, but they have no relation with the 45hr/week job which I do.
Now when someone asks me my salary I am totally confused what to say?

I follow a simple rule.
1) When IT asks for my salary (for PF, HRA, gratuity etc) I quote my basic.
2) When asked by a Head hunter I quote my ridiculous CTC.
3) When asked by a friend I want to impress, I even top it up with an extra stock earning to leave them extra dizzy.
4) When asked by my peer I quote my gross.
5) When asked by someone whom I owe money… it is always my humble take-home.

Can’t I live like a common man who says I earn Rs X and brings home Rs X. Why do I have to feel that every time I answer to this query I am lying or hiding something?

I am a strict follower of minimalism. I cheered when govt. introduced Saral to make my life simple. However can anybody tell me the significance of Basic salary and so many complicated structures? All my HRA, EPF, gratuity, leave encashment etc. is computed on Basic, but does it have a practical relevance?

For public/govt. sector, it is understandable that they have a basic salary and that is used to calculate all the allowances, perks, the seniority and rank. For private sector employees it is an artificial reverse engineering concept. They have the whole figure and then divide and subdivide it to come up with the basic (usually 40% of the gross) I won’t be surprised if someone has a basic pay of Rs 6457.45. (not a round figure)

Won’t it be simple if they simplify this and calculate everything on the basis of my gross? (K.I.S.S. Keep it simple, Stupid!)

Salary woes

Filed under: salary, Thoughts — pegasus @ 7:10 AM

If someone says I have a salary of 360,000/- I expect him to be earning 30k p.m. and not bringing home 14-16 p.m. I feel stupid when people announce bloated CTC and ever diminishing pay cheque.

What I understand by salary has the following legitimate components:
1) There is a take home component ( Basic+ special allowance + HRA) (which pays for all my expenses)
2) There is an Income Tax/ Professional tax etc. component (which runs the country)
3) There is a reimbursable component (like medical, telephone, travel, food, LTA etc.) (which helps me reduce my tax burden)
4) EPF (employee provident fund) (which takes care of my senile decay)
5) Assured Quarterly/annual Component (this does not include ####* marked performance bonus which fluctuates each year and can be withdrawn anytime)

Anything other than all these 5 components is artificial and a big scam. It only demonstrates the inefficiency of the company and its payroll department. My salary is not the place where you account for the units of electricity consumed for lighting my office, the rental of my cubicle, tissue paper or pencils used while doing genuine office work.

Election funds: Corruption in Indian politics.

Filed under: Thoughts — pegasus @ 5:48 AM

I have a theory that the major cause of corruption in Indian politics is because there is no Audits on Election Expenses.
1) Going by the conservative estimates, each MP requires 3 million Rupees (30 lakhs) to fight election. So a national party fielding 550 candidates require 1650 million.
2) MLA requires 1 million, but are 4 times more in number 2200 million
3) Gram Panchayat/ municipality corporate require at least 30,000/- so another 2640 million.

So the total cost is approximately 6490 million. Please note that this does not include cost to motivate your workers, summon goons for booth capturing, horse trading, sabotage opposition, buying rally members/slogan chanters and distribute booze to win the votes.

Assuming we have elections every 3 years, each national party requires spending of about 4000 million each year to maintain its ranks. This includes only legitimate and accountable spending. When I add up clandestine operations, horse-trading, rewards etc., this figure can go up many folds.

* Where do you get so much of funds?
Though some candidates like Vijay Mallya exist who can pay for their own expenses, but I am still born and brought up with an image that an honest and able candidate lives in poverty. (After all an elected member of the state earns only 2-3 thousand a month and cannot hold another office of profit)

Most PSU and banks have a cash handling allowance. All tellers/cashiers dealing with large quantities of cash are given some extra income so that they stay honest. (I do not know if it works, but the intention is appreciation worthy) Then why is a cabinet minister who with a stroke of a pen can make and destroy billions of rupees paid only 10,000/- p.m. Even unskilled graduates fresh out of college earn more.

Remember a party might fund some deserving candidates for their election campaign. But once they get elected, they want their money back and no one tells them how!

I have met lots of strong supporters to a political party/leader. But I am yet to meet a single individual who has voluntarily donated even a single rupee to a political party. (Voluntarily = no kick-backs) So how does the funding works?

1) You have lobbyist (even the small merchants in the markets have a union/lobby these days) who pays for every expenses
2) Corruption.

Well there could be a 3rd way. For any candidate getting more than 20% of the votes, the government can reimburse some of the party expenses. In return they could ask for a detailed account of the spending.
I am not asking you to give a dole of cash. Pay for the legitimate bills on fuel, food coupons, office space, telephone, banner space etc.
We might be never able to weed out corruption from our system in a lifetime, but surely we should make a provision that an honest man can survive honestly. Let’s not force him to compromise with his consciousness.

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